A builder can pay closing costs and buy down your rate. Your down payment has to come from your own funds or an allowable gift. Builders routinely offer closing-cost credits and rate buydowns, temporary or permanent, within the seller-contribution caps your loan program sets. Those credits cut your cash to close and your monthly payment. The down payment sits behind a hard wall. FHA prohibits any interested party, meaning the seller, builder, or agent, from funding the borrower's minimum required investment. Fannie Mae and Freddie Mac limit interested-party contributions to closing costs and prepaids. Congress banned seller-funded down-payment assistance outright in the Housing and Economic Recovery Act of 2008. So an incentive package can cover your closing costs and your rate, leaving you to bring only the down payment. It cannot cover the down payment itself. If a builder's marketing implies they will cover everything, read the fine print, because that part is against the rules. One more thing worth remembering: a builder credit is given in lieu of a lower price, so it is your own money moved around. Get the incentive in writing, have your loan officer confirm it fits within program caps, and make sure the price still makes sense with the credit attached.